What Higher Energy Prices Really Mean for Your Everyday Costs
You don’t need to watch the news to know that energy prices are getting higher. What you may not know is that these increasing energy costs can impact more than your utility bills — they can also hit you in unexpected places, like the grocery store and even the cost of getting packages delivered to your doorstep.
Remember, you’re not the only one paying more at the pump or for utilities. Every product you buy needs energy to be produced, transported and stored. MoneyLion spoke to experts who shared their takes on how fluctuating energy prices can give an unwelcome jolt to your budget.
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Transportation Costs Have Increased Across the Board
If you’ve been hard hit by gas prices, you’re far from alone. Even the companies responsible for transporting items to your favorite stores have been burdened by higher costs.
According to Arif Gasilov, partner at Gasilov Group specializing in natural resources and the built environment, companies often must pass those costs down to customers. He said that everything that moves by truck, ship or plane has gotten more expensive, which means price increases have compounded at every step of the supply chain.
There’s another transportation- and storage-related factor, too, that many people don’t consider.
“Supermarkets, stores and warehouses all have to keep perishables refrigerated, which takes electricity,” Gasilov said. “So the cost of rising electricity also gets added to food prices.”
Food Costs Can Be Impacted by Fertilizer Costs (No, Really)
It’s no secret that food prices are impacted by energy costs. However, not all food prices are affected equally. While items that depend heavily on transportation — like seafood — could become cheaper as fuel costs fall, Gasilov warned that foods reliant on corn production might not see the same price drop as quickly.
“Corn is the most fertilizer-intensive major U.S. crop, and urea, a major fertilizer component, has roughly doubled since February,” Gasilov said.
Fertilizer prices are a major expense for farmers, and unfortunately, they often take much longer to come down. People who buy foods tied to corn production — a broad category that includes dairy products, sweeteners and many processed foods — may not see relief for three to six months.
Housing Is Another Area Where People Are Hard Hit
For Martyn Fowler, founder of Elite Renewables, energy is a factor in almost everything people buy, and higher energy bills impact the cost of almost everything — including housing.
“Landlords face higher maintenance and operating costs, and builders and manufacturers face higher production costs,” Fowler said. “Those increases eventually feed into rents, service charges and construction costs.”
Fowler added that housing-related increases can take longer for the average person to feel because rent agreements and maintenance contracts often last longer. As a result, costs are typically adjusted over months rather than compressed into weeks.
“Of course, that means the effects of energy inflation can appear long after the original energy price spike has happened,” Fowler said.
You May Be Limited in How Much You Can Really Mitigate the Impact
Since energy touches nearly every aspect of your daily life, you might find yourself more limited than you’d like when it comes to mitigating the impact of higher costs.
Are there steps you can take to lower your own energy bills and utility fees? Absolutely. However, Fowler warned that individual consumers can’t single-handedly overhaul systemic issues.
“Most households can reduce discretionary spending if they need to, but they still have to heat their home, travel to work and buy food,” Fowler said. “When the costs behind those essentials rise at the same time, it creates a feeling that everything is becoming more expensive.”
The Bottom Line
Higher energy prices are evident just about everywhere these days, from rising rents and increased grocery bills to utility costs that are less than inspiring.
While there’s not much everyday consumers can do to change broader economic forces, understanding how energy prices affect the cost of goods and services can help you better prepare for price increases and look for opportunities to save where you can.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal, or tax advice.
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